Correlation Between Xinhua Winshare and COSTCO WHOLESALE

Can any of the company-specific risk be diversified away by investing in both Xinhua Winshare and COSTCO WHOLESALE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xinhua Winshare and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinhua Winshare Publishing and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Xinhua Winshare and COSTCO WHOLESALE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xinhua Winshare with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and COSTCO WHOLESALE.

Diversification Opportunities for Xinhua Winshare and COSTCO WHOLESALE

0.33

Correlation Coefficient

Xinhua Winshare  COSTCO WHOLESALE

Weak diversification

The 3 months correlation between Xinhua and COSTCO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and Xinhua Winshare is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xinhua Winshare Publishing are associated (or correlated) with COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between Xinhua Winshare and COSTCO WHOLESALE

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to under-perform the COSTCO WHOLESALE. In addition to that, Xinhua Winshare is 1.77 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.23 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.04 per unit of volatility. If you would invest  2,880  in COSTCO WHOLESALE CDR on October 25, 2024 and sell it today you would earn a total of  20.00  from holding COSTCO WHOLESALE CDR or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xinhua Winshare Publishing  vs.  COSTCO WHOLESALE CDR

Xinhua Winshare Publ

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinhua Winshare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSTCO WHOLESALE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xinhua Winshare and COSTCO WHOLESALE

The main advantage of trading using opposite Xinhua Winshare and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinhua Winshare position performs unexpectedly, COSTCO WHOLESALE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.

The idea behind Xinhua Winshare Publishing and COSTCO WHOLESALE CDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.